On December 13, some traders re-examined last week’s USDA report and believed that last week’s increase in export sales and the decline in global inventories were positive. Moreover, last Friday’s CPI showed that U.S. inflation is still at a high fever. Optimism and positive sentiment have promoted cotton prices. The price rose more than a hundred points intraday.
Judging from the latest CFTC position report, as of the week of December 7, the net long position of funds was 70,309 lots, a decrease of 7,434 lots, which is far from the previous high of 95,000 lots.
On Tuesday and Wednesday this week, the Federal Reserve will hold its monthly interest rate meeting to discuss whether to speed up the Taper process if inflation is higher than expected. The market is worried that the Federal Reserve will raise interest rates earlier than expected.
On Monday, ICE cotton futures fell from their intraday highs, with some traders closing positions at price highs. On the same day, crude oil and related markets fell, with the market doubting the effectiveness of the vaccine on “Omicron”. The mutant strain has spread in more than 60 countries around the world, posing huge security risks to the world. The World Health Organization has made it clear that the strain is indeed able to evade protection from some vaccines. However, OPEC sees the strain’s impact on global fuel demand as moderate.
Although the U.S. cotton harvest has basically ended, a large amount of new cotton is still stranded in the cotton fields and has not been transported to the ginnery. In the next 6-10 days, there will be more rainfall from Texas to Georgia, temperatures in Texas will be close to normal, and temperatures from Georgia to Virginia will be high. The temperature in the state is on the high side.
In recent times, ICE futures trading has become increasingly thin. Although the price has stabilized after falling, it has lost some of its early upward momentum. After the harvest in the northern hemisphere is completed, the market will pay more attention to signals of cotton demand. If U.S. cotton signings and shipments cannot continue to bring good news, the market’s enthusiasm for continuing to do long will slowly diminish. In addition, as Christmas and New Year are approaching, speculators may liquidate their positions in advance and are unlikely to take overly aggressive operations. Therefore, it is more likely that cotton prices will continue to consolidate in the next few weeks.
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